Israeli Tax Authority Investigates Construction Company Owner for 26 Million Shekel Fake Invoice Scheme

The Israeli Tax Authority has detained Shmuel Gazit, owner and director of Niti Development and Construction Ltd., on suspicion of using fake invoices to offset approximately 26 million shekels. Gazit, a resident of Ramat Hasharon, was brought before the Jerusalem Magistrate's Court and released under restrictive conditions. The investigation, conducted by the Customs and VAT Investigations Department in Jerusalem, alleges that between 2022 and 2025, Gazit deducted tax invoices suspected to be fictitious, resulting in a tax deduction of about 4 million shekels.

The Tax Authority has long been combating the widespread issue of fake invoices, which it considers a national plague causing billions in lost state revenue. Efforts include the implementation of the "Israeli Invoices" system, which mandates real-time invoice reporting to reduce the circulation of fake invoices. The authority is also allocating resources to uncover criminal networks distributing fake invoices, which it estimates evade VAT in the hundreds of millions of shekels, as well as to identify smaller-scale evaders whose cumulative losses significantly impact state finances.

A forthcoming reform, known as "Israeli Invoices 2.0" or online VAT, aims to further tighten controls by requiring immediate VAT payment at the time of transaction. This upgrade will leverage existing technological infrastructure to create a fully digital and paperless process.

Gazit has not been convicted and retains the presumption of innocence. The case highlights ongoing challenges in Israel's fight against tax evasion through fraudulent invoicing.